Disability Insurance for Physicians | The Dos and Don’ts

April 27, 2018Richard Reich

When starting their careers, physicians are typically taught the necessity of buying individual disability insurance policy during the course of or soon after training. Regrettably, not all individual disability policies are the same, which is why we encourage physicians to follow certain best practices to avoid buying insufficient income protection. We have listed for you the Dos and Don’ts for physicians when choosing an individual disability insurance policy.

DO – Compare Multiple Insurance Companies

Today is a perfect time for physicians looking to purchase individual disability insurance. There are many insurance companies delivering comprehensive and reasonably priced insurance coverage. This is exactly why it is crucial to review multiple solutions in order to reach the most informed decision possible. Make sure that you thoroughly examine policy features and conditions being provided before you consider the pricing.

When you purchase individual disability insurance, you usually get what you pay for. Then again, some companies are more reasonably priced than other companies for selected medical specialties. Unless you diligently review multiple solutions, you’ll likely end up paying too much for similar coverage.

DO – Confirm Own Occupation Definition

The most beneficial definition of total disability on the market today is the True Own-Occupation definition. This definition expresses that the insurance carrier will consider you totally disabled if you are unable to execute the material and substantial obligations of your occupation (your specialty), even if you are working in a totally different occupation (or specialty).

There are a quite a few insurance companies providing this form of disability coverage to physicians today, but be careful as a number of companies promote insurance policies as Own–Occupation, even when they don’t provide a true Own-Occupation definition of total disability.

DO – Inquire about Each Policy’s Benefits and Riders

Medical residents are in an unusual position, where particular benefits and optional riders could very well maximize the value of the disability insurance policy. Resident physicians need to ask their agent to go over the available policy riders so that they can examine, compare and recommend which features are the most relevant and worded in favor of the insured.

DO – Take Time to Select an Agent or Broker

When you begin the shopping process for individual disability insurance, listen to and take advice from an experienced and reputable insurance broker, especially one that is familiar with the risks presented by the medical profession. It costs nothing to speak with and have an insurance broker advocate for you during the shopping, purchasing, and underwriting process.

Independent insurance brokers who specialize in disability insurance for physicians will represent all of the top carriers who provide the most appropriate insurance solutions at reasonable prices.

DO NOT – Blindly take the Agent’s Recommendation

Even though your agent or broker may seem intelligent, honest and sincere, there may be things that he/she does not understand about every disability policy and its specific coverages. Requesting to read a specimen policy should not be insulting and will help you better comprehend the benefits that any given policy actually offers.

It would also be appropriate for you to request multiple recommendations so you can make evaluations yourself. Even if your representative informs you that he or she has reviewed a variety of insurance policies and can equally recommend every one of them, you ought to be offered the opportunity of examining those proposals yourself in order to decide whether good quality strategies are being offered.

DO NOT – Provide Misleading Information

In every insurance application and contract, there is a disclosure stating that fraud can be grounds for disputing and declining claims with no statute of limitations. This indicates that even if you have had the disability policy for 15 years before having to file a claim with the carrier, they can deny your claim if fraud was committed when you completed the application.

Instead of paying for a dishonest feeling of security and lying or providing untrue information in order to attain disability insurance coverage, it is better to address each and every question on the application honestly and accurately.

DO NOT – Purchase a Policy You Cannot Afford

Individual disability insurance is commonly viewed as a very expensive kind of insurance for physicians to buy while they are in training. This is somewhat because medical residents or fellows are qualified to buy a much larger benefit than would normally be appropriate for their particular level of income.

For instance, a resident physician who is earning $50,000 annually may be qualified for up to a $5,000 monthly benefit, the comparable amount that would typically be offered to someone earning about $100,000. Although this may appear to be clearly advantageous in a claim situation, it would also require a greater ratio of cash flow to be assigned to the insurance premiums. It would definitely worth taking a look at the largest benefit level, but do not forget to consider your cash flow in your deliberation.

DO NOT – Allow Your Policy to Lapse

Allowing an insurance policy to lapse could present significant financial problems if you were to become disabled during the lapse. The insurance company will never back-date a reinstatement because you forgot to pay the premium or your banking institution declined to fund a payment. If your disability insurance policy should lapse, the same underwriting process you went through at the time of purchase will once again be required. This will extend the time period that you are uninsured and could be financially devastating.

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